N.M. Admin. Code § 13.2.8.13

Current through Register Vol. 35, No. 24, December 23, 2024

Section 13.2.8.13 - CREDIT FOR REINSURANCE - CERTIFIED REINSURERS

A. Pursuant to Sections 59A-12E-7 through 59A-12E-9 NMSA 1978, the superintendent will allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in this state at all times for which statutory financial statement credit for reinsurance is claimed under this Section or 13.2.8.14 NMAC. The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the superintendent. The security shall be in a form consistent with the provisions of Sections 59A-12E-7 through 59A-12E-9 and Section 59A-12E-16 NMSA 1978 and 13.2.8.19 through 13.2.8.26 NMAC. The amount of security required in order for full credit to be allowed shall correspond with the following requirements:

Ratings Security	Required
Secure - 1	0%
Secure - 2	10%
Secure - 3	20%
Secure - 4	50%
Secure - 5	75%
Vulnerable - 6	100%

B. Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.

C. The superintendent will require the certified reinsurer to post one hundred percent, for the benefit of the ceding insurer or its estate, security upon the entry of an order of rehabilitation, liquidation or conservation against the ceding insurer.

D. In order to facilitate the prompt payment of claims, a certified reinsurer shall not be required to post security for catastrophe recoverables for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the superintendent. The one-year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for only the following lines of business as reported on the NAIC annual financial statement related specifically to the catastrophic occurrence will be included in the deferral:

(1) Line 1: Fire;

(2) Line 2: Allied lines;

(3) Line 3: Farmowners multiple peril

(4) Line 4: Homeowners multiple peril;

(5) Line 5: Commercial multiple peril;

(6) Line 9: Inland marine;

(7) Line 12: Earthquake; and

(8) Line 21: Auto physical damage.

E. Credit for reinsurance under this section shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new contract.

F. Nothing in this section shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this Section.

N.M. Admin. Code § 13.2.8.13

7/1/97; Recompiled 11/30/01, Adopted by New Mexico Register, Volume XXIX, Issue 14, July 24, 2018, eff. 7/24/2018, Adopted by New Mexico Register, Volume XXXIII, Issue 12, June 21, 2022, eff. 7/1/2022